Rep. Morgan F. Murphy (D-Ill.). said yesterday he may have to give up his seat if the House passes the proposed rule to limit members outside earned income.
In each of the six years Murphy has been in Congress, he says he has earned from $30,000 to $50,000 from the law firm back in Chicago that he organized after he was first elected. Specializing in real estate investments and local zoning, "but no FHA money," says Murphy, the firm last year listed the congressman's $15,000-a-year district representative, Eugene Callahan, as associated with the firm.
Murphy called the income limitation rule "a rich man's bill that will penaltize a guy in my age bracket . I'm at a time [with three children] where I must spend the most money in my life," Murphy said.
Members of the Obey commission privately scoff at Murphy's suggestion that he would leave the House rather than sacrifice the income from his law firm. But the commission members recognize that the intensity of opposition from Murphy and others in his position pose a threat to passage of the income limitation.
The House's practicing lawyers, who would apparently be the biggest losers under the proposal rule, have been quietly talking together about strategies to scuttle the Obey plan.
As drafted by the Obey Commission, the new rule would limit a member's future outside earnings to 15 per cent of his House salary. That would come to $8,625 if the new pay raise, to $57,500, is approved.
The rule would not, however, limit investment income, nor income from family-owned farms or businesses.
According to the Obey Commission, an estimated 50 to 75 members received over $5,000 "for personal services" in 1975. Who they were and how much each they earned was not disclosed, since present House rules do not require public reporting of such information.
The distinction between "earned" income and investments infuriates such members as Rep. Mario Biaggio (D-N.Y.), who will have to give up his New York law firm and the $35,000 he says he earns from it every year if the rule is passed.
"It's just not proper," Biaggi says. "I started that firm. I built it from nothing, and I'm proud of it. They have no right to take it away from me when the rich guys get to keep their stocks."
Biaggi says he needs the additional income because he has two children in college. But he intends to stay in Congress even if the limitation passes. "We'll find the money some way," he says.
While Murphy, Biaggi and other members plan to fight, a few, such as Rep. Michael J. Harrington (D-Mass.), are preparing for what they consider the inevitable.
Harrington publicly reported earining $29.801 from his law practice in 1975 - and it became a hot issue in his re-election campaign last year. Now Harrington is going to withdraw from the firm he helped found.
"The proposed salary increase plus the political problems posed by changing morality has led to me sever the tie," Harrington said recently. "I'm not wealthy by birth, my family has undergone hardship . . . The firm won't deal with questionable legal areas," Harrington said in describing his original reasons for maintaining his practice.
Rep. Frederick W. Richmond (D-N.Y.) falls within the category of congressional outside income earners who believe they will be exempt from the new rule.
Richmond said yesterday he received a $125,000 salary from Walco National Corp., a company he controls that is listed on the American Stock Exchange. Because he owns 52 per cent of the stock, Richmond considers the corporation's salary falls under the "family business" category, since he founded it and has the controlling interest.
Among other congressmen whose outside incomes would be preserved under the "family income" rule are Minority Leader John J. Rhodes (R-Ariz.), Berkley W. Bedell (D-Iowa), and William L. Armstrong (R-Colo.).
Rhodes says he earns about $30,000 annually from the insurance agency he founded and still controls in Arizona. Bedell owns a fishing tackle manufacturing firm, but says he doesn't know how much he receives from it annually. Armstrong receives income from his family's broadcasting company, but will not say how much he earns.
The new rules would require members to disclose the sources and amounts of any outside income over $100 per year. That requirement would take effect in April, 1978.
Murphy said "disclosure doesn't bother me at all." He said he had regularly answered reporters' questions on the amount of his income.
Biaggi said he, too, favors full disclosure of congressmen's income. Richmond says he supports the entire Obey package, including the disclosure rule. Armstrong said he would oppose the Obey recommendations because "they don't go to the scandal that started this whole exercise. That was padded office payrolls."
Murphy said yesterday he had talked with Rep. Claude D. Pepper (D-Fla.) recently about the Obey rule. Pepper, according to Murphy, said he had given up his law practice when he was in the Senate between 1936 and 1951. When he lost re-election, he found he was broke and had nothing to fall back on.
Pepper started his law practice over again and does not want to drop it, according to Murphy.
Since both Murphy and Pepper are on the House Rules Committee, which will hold hearings on the income limitation measure, it may face opposition when the commission chairman Rep. David R. Obey (D-Wis.), presents it for consideration.